By Caitlin McCabe and Anna Hirtenstein 

U.S. stocks tumbled Thursday in a choppy trading session as investors weighed their optimism about the re-opening of the economy against fresh data that showed the pandemic's continued toll.

The Dow Jones Industrial Average swung between gains and losses throughout most of the session, before rising 12 points as of the 4 p.m. ET close of trading. Companies from Microsoft to UnitedHealth Group to Nike dragged the blue-chip index down, while a rally in heavyweight Boeing helped mitigate the losses that the other indexes suffered.

The S&P 500 dropped 0.3%, snapping a four-session winning streak. The Nasdaq Composite fell 0.7%, pulled down by declines in shares of mega-cap technology companies.

Stocks have rallied for much of the week, despite the social unrest and widespread protests that have gripped the country since George Floyd, a black man, died after being restrained by Minneapolis police.Traders had instead focused on promising signs of an economic recovery, as well as optimism that global economies could see more stimulus measures.

Yet Thursday's data on job losses and trade paused that hopeful rally, giving investors the chance to take profits after a strong rally in recent weeks.

"There's a little bit of [questioning] of how far can this [rally] go?" said Brad McMillan, chief investment officer at Commonwealth Financial Network. "From a bearish perspective, there's still a lot to worry about."

"But from a bullish perspective, we do see the pandemic under control and no meaningful signs of a second wave yet," he continued. "A V-shaped recovery seems more possible than it was a week ago."

The S&P 500 and the Dow are on pace for their third consecutive week of gains, which would be the longest winning streak for both indexes this year. The S&P 500 has risen 1.9% week-to-date, cuttings its losses for the year to 4%.

Yet new data released before the markets opened Thursday weighed on investor sentiment for most the trading session. The Commerce Department said the U.S. trade deficit widened in April as imports and exports both dropped sharply amid coronavirus-related shutdowns around the world. The foreign-trade gap in goods and services expanded 16.7% from the prior month to a seasonally adjusted $49.41 billion.

Meanwhile, the number of Americans drawing unemployment benefits ticked up to 21.5 million in the week ended May 23, though the pace of increase significantly slowed from earlier in the crisis, the Labor Department said.

Losses across stocks were broad, with nine of the S&P 500's 11 sectors posting declines. A rally in the financials and industrials sector -- both of which were hit hard at the beginning of the stocks selloff -- continued. American Airlines added 42%, its largest percentage increase on record, according to available data since December 2013.

Declines were broad across big technology companies, a group that has largely helped buoy the stock market off its late-March low. Netflix lost 2.4% and Facebook fell 1.8%. Zoom Video Communications tumbled 6.2%.

In Treasury markets, the yield on the 10-year U.S. Treasury note jumped to 0.818%, from 0.761% Wednesday. Yields rise when bond prices fall.

Elsewhere, the pan-continental Stoxx Europe 600 fell 0.7% after the European Central Bank said it would scale up its bond-purchase program to EUR1.35 trillion ($1.52 trillion) through June 2021. The bank also left its key interest rate unchanged at minus 0.5%.

The eurozone economy has undergone an unprecedented sharp contraction as a result of the coronavirus pandemic and there are "exceptional" levels of uncertainty, ECB President Christine Lagarde said in a press conference. The ECB's decision was more aggressive than expected by analysts.

"They've delivered what was wanted by the market," said Seema Shah, chief strategist at Principal Global Investors. "It's delivering what it needed to do" which was to extend its ammunition beyond the autumn, she said, referring to the bond-buying program.

And in Asia, Hong Kong's Hang Seng Index ticked 0.2% higher, while the Shanghai Composite Index edged down 0.1%.

"There's a disconnect between equities and the economic fundamentals," said Alex Wong, a director at hedge fund Ample Capital, noting that he is holding more cash after gradually reducing investments in some richly valued new-economy stocks.

"Many investors are looking beyond short-term realities and banking on hopes of an economic recovery in 2021 as global economies gradually reopen," he said.

Joanne Chiu contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

(END) Dow Jones Newswires

June 04, 2020 16:27 ET (20:27 GMT)

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